Baltimore residents to get $2.5M from Wells Fargo settlement

Deal settles lawsuit claiming bank engaged in predatory practices

Wells Fargo will soon pay Baltimore City millions of dollars after the company agreed to settle a lawsuit claiming it engaged in predatory lending practices targeting minority homebuyers.

The lawsuit filed by Baltimore City in 2008 accused Wells Fargo of steering black homebuyers into subprime loans. Baltimore was the first city to file suit, and more than a half-dozen other cities followed.

"If you were African-American or Latino, you were more likely to be placed in a subprime loan or pay more for a mortgage loan even though you were qualified and deserved better treatment," said Assistant U.S. Attorney General Tom Perez.

Wells Fargo and the Department of Justice have reached a $175 million settlement with eight metropolitan areas. The lawsuit identified 34,000 victims nationwide, and 1,000 of those victims from the Baltimore are will receive a total of $2.5 million in restitution, with each victim receiving an average of $15,000.

As part of the deal, Baltimore agreed to drop its lawsuit against Wells Fargo in exchange for $4.5 million for a lending assistance program and $3 million to assist with future challenges related to foreclosures. The company also committed to lending $425 million for home buying in the city over the next five years.

"This agreement puts to rest our legal challenges and allows us to move forward collaboratively and work on growing the city," Mayor Stephanie Rawlings-Blake said.

According to city officials, the lending assistance program will be administered by a nonprofit agency.The city hopes to complete the process of restitution for individual victims within the next year.

Perez praised the city for its role in the second largest fair lending settlement in the Department of Justice's history.

"The lawsuit filed by Baltimore City was the catalytic force," Perez said. "When you filed this lawsuit to call attention to the devastating consequences of the fair lending crisis, you got the attention of the federal government, and you got the attention of the nation."

Wells Fargo on Thursday sent a statement to 11 News, saying, "Wells Fargo is settling this matter because we believe it is in the best interest of our team members, customers, communities and investors to avoid a long and costly legal fight and to instead devote our resources to continuing to contribute to the country's housing recovery."